It’s been a tough ride on the stock market for Record. The currency management specialist floated in 2007 only to run straight into the Great Financial Crash, and the next decade was spent recovering from the fallout.

Management has worked hard to reposition the business but progress has been slow due to industry headwinds driven by a shift towards lower margin Passive Hedging. Record has created higher margin products to combat this, but new client mandates have proven tricky to come by.

Despite this headwind, Record has made a name as a sensible small cap stock well managed for its shareholders. Its profitable business model has been used to pay out ordinary and special dividends and buy back shares. The majority of its employees are equity holders and staff turnover is low.

There are strong foundations here but one vital ingredient has been missing: growth. That might now be changing, with a management reshuffle looking like the key catalyst. Since that change in early 2020, there has been investment in technology with an emphasis on scalability of operations and a more client-centric, demand-led emphasis on new product and service innovation.

Record was pitched to the Stockopedia Investment Club on 10th August 2021 at a share price of 88.4p.

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Bull points: stable client base; high margins and cash generation; renewed emphasis on growth; new client wins and products; decades of experience; modernised, scalable infrastructure; share buybacks and special dividends; strong balance sheet; 99 Quality Rank.

Bear points: trend to lower margin passive hedging has weighed on profits; hard to win new clients; sensitive to equity markets; currency management is optional for institutions; lack of historic growth.


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About the Stock:

Record (LON:REC) is an established currency services provider to institutional investors. It’s in the Financial sector in the Investment Banking & Investment Services industry group, with a premium listing on the Main Market of the London Stock Exchange.

The current share price is 88.94p, down from recent multi-year highs of 102p after a period of strong performance. The market cap is £175m and liquidity is reasonable, with a 23bps spread and an EMS of 7,500 suggesting around £7,000 can be purchased easily.

The shares come with an Adventurous RiskRating, although recent volatility has been firmly to the upside. The StockRank is 88, made up of:

  • A…

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